Use the following to answer questions 9 through 11: On January 1, 2021, John Paul Jones...
Use the following to answer questions 9 through 11:
On January 1, 2021, John Paul Jones Corp. purchased 30% of Sky Tech Inc. for $45 million. This acquisition gave John Paul Jones significant influence over Sky Tech. At the date of acquisition, the bookvalue of Sky Tech's net assets was $75 million and their fair value was $90 million. The difference was attributed to the fair value of equipment exceeding book value, and the remaining useful life of this equipment was 5 years. For 2021, Sky Tech reported a net income of $75 million and declared and paid $20 million in dividends.
9. Relative to its investment in Sky Tech, the amount of investment income reported by John Paul Jones Corp. on it’s year end December 31, 2021 income statement is:
A)$6 million.
B) $16.5 million.
C) $22.5 million.
D)$21.6 million.
10. The total amount that John Paul Jones Corp. would report for its investment in Sky Tech Inc. on its December 31, 2021 balance sheet is:
A)$67.5 million.
B) $61.5 million.
C) $60.6 million.
D)$66.6 million.
11.Assuming John Paul cannot exercise significant influence over Sky Tech and classifies this investment as fair value through net income, total investment income reported by John Paul Jones Corp. on its year end December 31, 2021 income statement is:
A)$6 million.
B) $21.6 million.
C) $22.5 million.
D)$5.1 million.
Homework Answers
Part 9
Answer is option B
B) $16.5 million
Amount of investment income = net income – dividend = ($75 million *30%) – ($20 million * 30%) = $16.5 million
Part 10
Answer is option B
B) $16.5 million
Investment in Sky Tech Inc. = consideration paid + amount of investment income = $45 million + $16.5 million = $61.5 million
Part 11
Answer is option B
C) $22.5 million
Total investment income = $75 million *30% = $22.5 million
Add Answer to:
Use the following to answer questions 9 through 11:
On January 1, 2021, John Paul Jones...
Question 7 (1 point) / Saved Anthers Inc. bought the following portfolio of trading securities near...
Question 7 (1 point) / Saved Anthers Inc. bought the following portfolio of trading securities near the end of 2018 Security Cost $80,000 60,000 22,000 Fair value 12/31/2018 $84,000 54,000 22,000 What amount will be reported in the balance sheet for this portfolio at December 31, 2018, and how will it be classified? Amount Classification a. $162,000 Noncurrent Asset b. $162,000 Current Asset $160,000 Noncurrent Asset d. $160,000 Current Asset Option a Option b Optionc Option d Question 8 (1...
On January 1, 2020, Bramble Co. purchased 22,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were $12,000,000. On July 1, 2021, Bramble paid $3,100,000 for 44,000 additio
On January 1, 2020, Bramble Co. purchased 22,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were $12,000,000.On July 1, 2021, Bramble paid $3,100,000 for 44,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Bramble owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)John reported the following net income and...
On January 1, 2017, Shamrock Co. purchased 26,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Shamrock Co. purchased 26,000 shares (a 10%
interest) in Elton John Corp. for $1,380,000. At the time, the book
value and the fair value of John’s net assets were
$14,200,000.
On July 1, 2018, Shamrock paid $3,000,000 for 52,000 additional
shares of John common stock, which represented a 20% investment in
John. The fair value of John’s identifiable assets net of
liabilities was equal to their carrying amount of $15,500,000. As a
result of this transaction,...
On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1.450.000. At the time, the book value and the fair value of John's net assets were $12,000,000. On July 1, 2018, Bonita paid $2,740,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $13,200,000. As a result of this transaction,...
On January 1, 2017, Pearl Co. purchased 23,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Pearl Co. purchased 23,000 shares (a 10%
interest) in Elton John Corp. for $1,330,000. At the time, the book
value and the fair value of John’s net assets were
$12,300,000.
On July 1, 2018, Pearl paid $2,840,000 for 46,000 additional shares
of John common stock, which represented a 20% investment in John.
The fair value of John’s identifiable assets net of liabilities was
equal to their carrying amount of $13,300,000. As a result of this
transaction,...
On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction...
On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $240 million cash, giving Cameron the ability to exercise significant influence over Lake's operations. At the date of acquisition of the stock, Lake's net assets had a fair value of $600 million. Its book value was $500 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference....
On January 4, 2021, Runyan Bakery paid $334 million for 10 million shares of Lavery Labeling...
On January 4, 2021, Runyan Bakery paid $334 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $4 per share on December 15, 2021, and Lavery reported net income of $200 million for the year ended December 31, 2021....
On January 4, 2021, Runyan Bakery paid $342 million for 10 million shares of Lavery Labeling...
On January 4, 2021, Runyan Bakery paid $342 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $4 per share on December 15, 2021, and Lavery reported net income of $240 million for the year ended December 31, 2021....
On January 4, 2021, Runyan Bakery paid $338 million for 10 million shares of Lavery Labeling...
On January 4, 2021, Runyan Bakery paid $338 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2 per share on December 15, 2021, and Lavery reported net income of $220 million for the year ended December 31, 2021....
On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction...
On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $240 million cash, giving Cameron the ability to exercise significant influence over Lake's operations. At the date of acquisition of the stock, Lake's net assets had a fair value of $600 million. Its book value was $500 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference....
Question 7 (1 point) / Saved Anthers Inc. bought the following portfolio of trading securities near the end of 2018 Security Cost $80,000 60,000 22,000 Fair value 12/31/2018 $84,000 54,000 22,000 What amount will be reported in the balance sheet for this portfolio at December 31, 2018, and how will it be classified? Amount Classification a. $162,000 Noncurrent Asset b. $162,000 Current Asset $160,000 Noncurrent Asset d. $160,000 Current Asset Option a Option b Optionc Option d Question 8 (1...
On January 1, 2017, Shamrock Co. purchased 26,000 shares (a 10%
interest) in Elton John Corp. for $1,380,000. At the time, the book
value and the fair value of John’s net assets were
$14,200,000.
On July 1, 2018, Shamrock paid $3,000,000 for 52,000 additional
shares of John common stock, which represented a 20% investment in
John. The fair value of John’s identifiable assets net of
liabilities was equal to their carrying amount of $15,500,000. As a
result of this transaction,...
On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1.450.000. At the time, the book value and the fair value of John's net assets were $12,000,000. On July 1, 2018, Bonita paid $2,740,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $13,200,000. As a result of this transaction,...
On January 1, 2017, Pearl Co. purchased 23,000 shares (a 10%
interest) in Elton John Corp. for $1,330,000. At the time, the book
value and the fair value of John’s net assets were
$12,300,000.
On July 1, 2018, Pearl paid $2,840,000 for 46,000 additional shares
of John common stock, which represented a 20% investment in John.
The fair value of John’s identifiable assets net of liabilities was
equal to their carrying amount of $13,300,000. As a result of this
transaction,...
On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $240 million cash, giving Cameron the ability to exercise significant influence over Lake's operations. At the date of acquisition of the stock, Lake's net assets had a fair value of $600 million. Its book value was $500 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference....
On January 4, 2021, Runyan Bakery paid $334 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $4 per share on December 15, 2021, and Lavery reported net income of $200 million for the year ended December 31, 2021....
On January 4, 2021, Runyan Bakery paid $338 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan chose the fair value option to account for this investment. Runyan received dividends of $2 per share on December 15, 2021, and Lavery reported net income of $220 million for the year ended December 31, 2021....
On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $240 million cash, giving Cameron the ability to exercise significant influence over Lake's operations. At the date of acquisition of the stock, Lake's net assets had a fair value of $600 million. Its book value was $500 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference....
Most questions answered within 3 hours.
-
You have just been hired by the EPA to help with the new gas
mileage standards...
asked 34 minutes ago -
4) A firm is hit by increases in its wage rate, w.
a) How does this...
asked 48 minutes ago -
A square current loop 5.4 cm on each side carries a 510 mA
current. The loop...
asked 3 hours ago -
What are five tips in conducting knowledge assessment/literature
review research? Each of these tips needs to...
asked 3 hours ago -
Antigen presenting cells link innate and adaptive immune
responses. In the theoretical scenario where phagosomes cannot...
asked 3 hours ago -
Dealing with conflict, in my opinion, is a skill and an art. I
believe that those...
asked 4 hours ago -
6. A long straight wire with circular cross section and radius
1.5 cm carries a 1.2...
asked 4 hours ago -
Deacon Corporation has provided the following financial data
from its balance sheet and income statement:
Year...
asked 5 hours ago -
List and discuss at least three variables from everyday life for
which you expect the variable ...
asked 5 hours ago -
A high-pass filter consists of a 1.60 μF capacitor in series
with a 125 Ω resistor....
asked 5 hours ago -
A newly developed artificial intelligence has trouble
distinguishing hand-written numbers from hand-written alphabets.
There are pictures...
asked 5 hours ago -
The carbonate ion CO3 2- has multiple resonance structures.
a. Draw them and assign the hybridization...
asked 5 hours ago